As recently as 1980, China was trailing Italy in seventh place in the table of the world’s largest producer of manufactured goods. Since then it has overtaken the US and seen its GDP per capita double in the last decade, and that, the consultants say, took the UK 150 years to achieve.

But is the bubble about to burst? “Manufacturing growth is slowing more quickly than aggregate economic growth and evidence suggests that the country is already losing some new factory investments to lower-cost locations, such as Vietnam, sparking concern about China’s manufacturing competitiveness,” it states.

It is against this backdrop that any business looking to set up shop in China needs to base its decisions. Yet still the lure of manufacturing in that vast nation appeals.

RedChinaLinks explains that there are three ways to establish an official business presence in China; establishing a representative office, setting up a joint venture (JV) or creating a wholly foreign-owned enterprise (WFOE).

A JV will give fast access to local expertise, labour, Chinese customers and distribution channels. “What’s more, it will save you the considerable time and expense needed to start your own operation from scratch,” it says.

But setting up your own operation has become a whole lot easier. “The Chinese government has recently lowered the capital requirements needed to set up an WFOE,” it adds.

China has also created specialised zones for the location of foreign invested enterprises (FIEs), says China Strategies. Three are especially suited for foreign manufacturing and distribution operations: Special Economic Zones, Free Trade Zones and Export Processing Zones.

It says that foreign manufacturers established in these zones receive a tax holiday on profits for the first three to five years of operation but are required to pay duty on imported materials and 17 per cent VAT on the sale of all merchandise. If the merchandise is exported, the FIE can receive a 13 per cent VAT refund.

When it comes to setting up in China, entrepreneur Taylor Llewellyn has been there, done that. On Inc.com he passes on his tips based on hard experience: “If a factory says they can do something, make them prove it multiple times before entering in to an agreement. You should be extremely clear that quality is what you value above all else.”

He adds: “Always explicitly demand perfect quality with each shipment. Between 50 per cent and 75 per cent of your payment should not be rendered until after delivery. Go to China and meet potential partners face to face. You can usually get a feel for whether someone is trustworthy and reliable.”

Exporting is everything. If British businesses are to grow, delivering services and products in overseas markets is crucial for success. This series, in association with UPS, offers tips, ideas and personal stories to help small and medium-sized businesses expand manufacturing and operations beyond their current realms